Pension Funds’ Securities Fraud Suit Revived by Appellate Court

Investors
of Celestica Inc., a Canadian electronics manufacturer, sued the company and
its former chief executive officer, Stephen Delaney, and former chief financial
officer, Anthony Puppi, in 2007. Investors claimed misstatements artificially inflated
the company’s share price, causing them to lose money when the true costs
associated with a restructuring became public, according to Bloomberg.

The group seeks damages on behalf of all those who bought the Toronto-based
company’s stock from January 27, 2005 to January 30, 2007.

The
appellate panel found the shareholders alleged sufficient facts to support the
defendants’ scienter, or knowledge they knew they were misstating Celestica’s
earnings and financial prospects.

“The
particular allegations that Delaney and Puppi were specifically informed, and
had reason to know of the growing inventory stockpile in Celestica’s Mexican
and American facilities are sufficient to establish the individual defendants’
scienter,” the panel said in the ruling. “Moreover, those allegations are
sufficient to establish corporate scienter on behalf of Celestica.”

The
lead plaintiffs are the New Orleans Employees Retirement System and three
Ontario funds: Millwright Regional Council of Ontario Pension Trust Fund,
Carpenter’s Local 27 Benefit Trust Fund and Dry Wall Acoustic Lathing and
Insulation Local 675 Pension Fund.

The decision in New Orleans
Employees Retirement System v. Celestica, Inc. is here.